Samsung SDI supplies ESS batteries to Tesla, upping hope for EV battery order

2021.01.12 13:56:45 | 2021.01.12 21:34:04

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South Korea’s Samsung SDI Co., a global leader in the burgeoning energy storage system (ESS) market, won an additional order to supply ESS batteries to U.S. electric vehicle giant Tesla.

According to industry sources on Monday, Samsung SDI has been supplying its ESS batteries to Tesla since the fourth quarter of last year. The contract size or value was not disclosed but it is estimated to be a major deal for the Korean ESS leader, industry insiders say.

Tesla deployed ESS with a record capacity of 759 megawatt-hours (MWh) in the July-September period last year, nearly doubling from 419 MWh in the January-March period.

This is the third time Samsung SDI has supplied its ESS batteries to Tesla. It supplied 18650 batteries in 2015 and 21700 batteries in 2017. Industry insiders speculated the ESS batteries supplied this time would be 21700.

Because the 21700 battery has the same size of EV battery used in Tesla’s some EV models like Model 3 sedan, industry watchers keep a close eye on whether the latest ESS battery order could lead to another supply deal for EV batteries.

Thanks to its brisk sales of both ESS and EV batteries last year, Samsung SDI is estimated to have earned a record 320 billion won in operating profit in the quarter ended December, soaring from 20.1 billion won a year earlier. Quarterly operating profit would top 300 billion won for the first time in history, analysts expect.

“(Samsung SDI’s) EV battery business is forecast to deliver 1.4 trillion won in sales after gaining 57 percent on quarter, and ESS battery division 390 billion won, up 50 percent during the period,” said Lee Sun-hak, an analyst at Hanwha Investment & Securities.

ESS market outlook also is bright under the upcoming Joe Biden administration in the U.S., another upside for Samsung SDI. The global ESS market is expected to grow to 29.5 GWh in 2021 from 19.9 GWh in 2020 and 11.1 GWh in 2019, according to data from market research firm SNE Research.

As part of efforts to propel the growth further, Samsung SDI recently carried out management reshuffles.

Kim Jong-sung, former head of support at Samsung Electronics’ video display division, was tapped as the new head of the management support division at Samsung SDI. Park Zin, senior vice president at the European office, was chosen to head the mid- to large-size battery division for EV and ESS businesses, and Kim Yoon-chang will lead the small battery division.

Samsung SDI shares closed 2.05 percent higher at 745,000 won ($677.89) in Seoul on Tuesday.

By Lee Yoon-jae and Lee Ha-yeon

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